Chapter 3: Conservation Practices
3.6 Normalizing Agricultural Conservation Practice Costs
The range in EQIP cost estimates for conservation practices of interest is over $720—over 140 times the five-point range in DRP reduction scores from the Heidelberg toolkit. As a final step, we normalized these cost to a scale of one (least cost) to five (highest cost). Normalizing costs to the same range as DRP reduction score will allow us to develop a clearer picture of the relative cost-effectiveness of different conservation practices in future chapters. By inverting cost scale values, we are also able to create a 4th axis on our radar graph to reflect cost considerations.
To translate our $/acre values onto a 1-5 scale, we take the natural log of the cost for each practice and normalized the result to a 1-5 scale based on the complete set of practices in the Heidelberg toolkit.
For the purposes of the radar graph in Figure 3.9, we invert all of the resulting scores so that a 5 means “least expensive”—putting our visual understanding of this graph axis in keeping with our visual understanding of the other axes where a higher numeric score is “better” in terms of attractiveness for adoption of that conservation practice. In the figure key, each conservation practice’s cost score is listed after its name in parentheses.
Due to data limitations on the part of information made available by NRCS, we were not able to account for detail within the long term maintenance costs of these conservation practices or accurately capture how the distribution of these costs over time relates to DRP reductions
achieved by each conservation practice. As a result, longer term practices such as riparian buffer strips and tree and shrub establishment may appear less cost effective in this analysis than they really are due to our inability to quantitatively account for long term impacts
35
Figure 3.9: Agricultural conservation practices for inclusion in multi-criteria evaluation model
** numbers in parenthesis denote 1-5 cost score as described in this section.
1= most expensive, 5= least expensive -1
0 1 2 3 4
DRP reduction5
storm runoff
cost likelihood
Subsurface injection (3) Cover cropping (3) Strip cropping (5)
Trees/shrub establishment (2) Riparian forest buffer (2) Mulch till basic (1)
36
Chapter 4:
Policy Tools and Case Studies
Contents
4.1 Introduction to the Spectrum of Policy Options 4.2 Land Retirement
Case Box 1: Conservation Reserve Program
and Conservation Reserve Enhancement Program 4.3 Nutrient Management
Case Box 2: County-level Mandatory Nutrient Management in Wisconsin Case Box 3: State-level Mandatory Nutrient Management in Chesapeake Bay Case Box 4: Watershed-scale Mandatory Nutrient Management in Chesapeake 4.4 Phosphorus Tax
4.5 Total Maximum Daily Load
Case Box 5: The Chesapeake Bay TMDL 4.6 Water Quality Permit Trading
Case Box 6: Ohio River Basin Trading Project 4.7 Litigation
Case Box 7: Des Moines, Iowa
4.8 Summary of Policy Recommendations for the Maumee River Watershed
Related Appendixes:
Appendix 4A: Environmental Quality Incentives Program Appendix 4B: Regulatory Certainty
Appendix 4C: Performance Bonds Appendix 4D: Fertilizer Certification
Appendix 4E: Federal Microsystin Standard
37
A quantifiable target of 41% reduction in annual dissolved reactive phosphorus (DRP) loads has been set by the International Joint Commission for the Maumee River (see Chapter 2.4) and we have established a quantitative understanding of the composition of the Maumee River watershed as well as the agricultural conservation practices best suited to reducing DRP (see Chapter 3).
Thus, the next question becomes what policy approaches can assure implementation of these conservation practices at the watershed scale in order to help in achieving the DRP reduction target. From voluntary programs to regulatory actions, we explore possible strategies and tools for increasing implementation of land management practices that can reduce DRP loads.
4.1 Introduction to the Spectrum of Policy Options
While decades of federal and state agricultural policies as well as market forces have contributed to existing environmental challenges in Western Lake Erie, policy change can be an avenue for advancing farmers’ role as environmental stewards, conservationists and benefactors of a healthy regional future. Policy change can help ensure conservation land management behaviors occur at the scale necessary to achieve desired ecological health outcomes.
Policies that influence agricultural land management practices range from voluntary incentives to mandatory regulation, and has historically been largely voluntary in the Maumee River Basin where many federal and state programs leverage Farm Bill funding into environmentally protective landowner actions addressing erosion, sediment control, habitat creation, and
drainage/runoff/water management. At the same time, regulation over specific activities such as animal feedlot sites has proved successful in instituting positive changes in management
behaviors and achieving desired environmental outcomes.
Our challenge in this project is to determine what policy tools or programs can help generate desired ecological goals in the context of the predominantly agricultural Maumee River Watershed. The policies examined here range in how they incentivize and/or require land management actions that encourage long-term stewardship and reduced nutrient runoff into the Maumee River Basin, from voluntary to regulatory, and operate at a variety of levels of
government, from federal to state to local.
Case boxes draw off of existing examples of policy implementation in other U.S. states, offering insights and considerations for utilizing approaches in the Maumee River Basin watershed. Two of these case studies, TMDLs and litigation, describe policies that can be used to set target limits on phosphorus loading. The remainder, land retirement, nutrient management planning, water quality trading, and phosphorus taxes, serve as mechanisms for achieving these targets once they have been set. Appendices provide additional information on possible program components and policy landscape considerations.
38
4.2 Land Retirement
Land retirement presents a conceptually simple approach to reducing nonpoint source pollution:
simply remove the acres that are responsible for pollution from agricultural production. Federally supported land retirement programs originated in the mid-20th century with the dual goals of preventing the overproduction of agricultural commodities and reducing the cultivation of highly erodible soils. These “set-aside” programs required that farmers devote a portion of their land to conservation uses in exchange for direct payments or in order to qualify for federal or state benefits such as loans.51 Increases in commodity prices led to the elimination of exclusively economically focused programs by the mid 1990’s. However, two Farm Bill programs, the Conservation Reserve Program (CRP) and the Conservation Reserve Enhancement Program (CREP), persist as the most significant mechanism for land retirement in the US. Both are designed to achieve environmental quality, rather than commodity price, goals.
Case Box 1: LAND RETIREMET IN PRACTICE
Conservation Reserve Program and Conservation Reserve Enhancement Program First authorized in the 1985 Farm Bill, the Conservation Reserve Program pays participating farmers to take highly erodible or otherwise environmentally sensitive land out of production for an extended period. The program is administered by the USDA’s Farm Service
Administration (FSA), with technical support provided by NRCS, state forestry agencies, local Figure 4.1: The spectrum of policy options
39
conservation districts, and others including non-federal parties. Farmers sign contracts with the FSA in which they agree to retire acres and institute certain basic conservation practices (generally maintaining or establishing vegetative cover) in exchange for a per-acre annual rental payment. Most of these are 10 year contracts.52
There are two avenues through which farmers can participate in CRP: general sign-ups and continuous sign-ups. Most participants enroll in CRP during general sign-ups, competitive bidding periods in which the FSA accepts offers from all eligible farmers who are interested in enrolling acres in the program. The FSA scores each offer using an Environmental Benefits Index (EBI) that takes into account the wildlife, water quality, air quality and erosion benefits of removing the land from production; the likelihood for conservation practices to remain in place after the contract period ends; and the size of the rental payment that the farmer has requested in order to participate (up to legislatively-defined maximum payments). At the conclusion of each general sign-up period the FSA sets an EBI threshold and accepts the offers with EBI scores above this threshold. Nation-wide, general sign-up rental payments averaged
$51.09 per acre in 2014.53
CRP enrollment is highly influenced by commodity crop prices. The Farm Bill sets an annual cap on the maximum number of acres of farmland that can be enrolled in CRP in a given year, and authorizes the FSA to spend as much as is needed to enroll up to this level of acres in the program each year. In the most recent (2014) Farm Bill, this enrollment cap is set to decline from 32 million acres in 2014 to 24 million acres in 2018. However, since 2008, increasing commodity prices have reduced farmer’s willingness to remove land from production, making it difficult to meet CRP enrollment goals. In 2014 the program enrolled a total of 25.4 million acres nationally, just 79% of the enrollment cap. This decline has occurred despite the fact that the FSA accepted a higher portion of the acres offered by farmers in the 2013 general sign up than in the 2012 sign up (88% as opposed to 85%), and that the enrolled acres had a lower average Environmental Benefits Index score (268 as opposed to 278 points).54
In contrast, the Conservation Reserve Enhancement Program (CREP) uses continuous sign-ups which allow farmers to enroll specific environmentally-sensitive land types in the program at any time. In CREP, the FSA partners with state governments to address specific
environmental concerns within defined geographic areas. In contrast to CRP general sign-ups, CREP participants may be required to implement more extensive conservation practices designed to mitigate the relevant environmental impact. CREP rental payments are significantly higher, averaging $136.70 per acre nationally in 2014.55
Land retirement in the Maumee River Basin
CRP is currently the largest mechanism for land retirement in the Maumee River Basin. As of the end of 2014, 65,060 acres were enrolled in CRP programs in ten Ohio counties drained by the Basin.56 Further acres are enrolled in the Lake Erie and Streams CREP agreement between the USDA and the state of Ohio, which is specifically designed to improve Lake Erie water quality through 14 and 15-year contracts requiring enrolled farmers to convert croplands to native grasses and trees.57
40
In its 2011 report “Feast and Famine in the Great Lakes,” the National Wildlife Federation recommended reversing this trend, arguing that an expansion of CRP enrollment would be a useful tool to address nutrient pollution in the Great Lakes.58 However, market forces and existing program structures may limit future program enrolment and compromise the program’s actual effectiveness at decreasing the chief nutrient pollution issue the Maumee River Basin faces, namely dissolved reactive phosphorus (DRP) runoff.
The overall efficacy of CRP and CREP are limited by decreasing enrollment. Paralleling national trends, the number of acres in CRP has dropped across the ten Ohio Maumee River Basin
counties from a peak of 87,350 acres in 2007 to 65,060 acres in 2014. This represents a 25.5%
decrease in enrolment over a seven-year period.
Most nonpoint source DRP in the Maumee Basin originates from intensively farmed low-slope farmlands in the center of the watershed. However, as it is currently structured, CRP
disproportionately enrolls low-productivity high-slope lands.59 Given high commodity prices, farmers tend to enroll in CRP the acres from which they expect the lowest yields and keep higher-yield lands in production. Surveys of Northwestern Ohio cropland cash rents prepared by Ohio State University Extension illustrate this point. Cash rents, which are highly correlated to commodity prices and input costs, averaged $140 per acre for “poor quality” farmland in 2013.
This value came close to the national average CREP rental payments of $136.70 per acre.
However “top quality” cropland rented for an average of $245 per acre, over $100 per acre more than the national average CREP rental payments.60
In addition, the Environmental Benefits Index used during CRP general sign-ups is structured to prioritize enrolling lands that are susceptible to soil erosion. The Lake Erie and Streams CREP lists reducing sediment runoff as its primary and only quantified goal. While the higher-slope acres on which most erosion occurs may be the point of origin for larger amounts of attached phosphorus, these acres are likely less responsible for DRP loading.
Recommendations
Use CREP to implement selection indexes that prioritize high DRP runoff acres. The FSA uses a single EBI nationally, making it at best a blunt instrument to further regional ecological goals.
Adjusting the Index to better reflect conservation priorities in the Maumee River Basin by emphasizing water quality impacts could require significant compromise with priorities in other regions. As a result, efforts should focus on refining and expanding regional CREP programs to enroll more of the high-productivity, low slope acres from which a larger portion of the DRP in the basin originates, and providing the funding necessary to offer market-rate rents on those acres.
Allocate funding to retire high-productivity acres. The types of farmland with the highest per acre levels of DRP runoff are likely also highly productive. In order to secure enrollment of these
“top quality” acres, rental payments would have to be sufficient to account for the additional income farmers would forgo by enrolling these lands in CREP.
41
4.3 Nutrient Management
Nutrient management plans (NMPs) define a site-specific conservation plan for nutrient use that optimizes economic benefits while minimizing environmental impacts.61 Nutrient management planning ensures a reduction in the application of excess Nitrogen and Phosphorus to a land parcel through use of soil tests to determine soil nutrient deficiencies, attention to appropriate timing of nutrient application, and employment of site-appropriate best management practices.
The cornerstone for nutrient management in the U.S. is the NRCS 590 Nutrient Management Planning Standard, which is used by NRCS staff when providing technical assistance or
implementing federal conservation programs. While the NRCS 590 Standard applies nationally, NRCS also works at the state level to supplement 590 guidance to local conditions, resulting in the majority of states issuing their own 590 Standard that supersedes the federal standard.
Participation in NRCS nutrient management programs is currently voluntary for the majority of U.S. crop agriculture under cost share programs such as the Environmental Quality Incentives Program (EQIP), though notable examples of mandatory nutrient management programs are discussed below.62
Comprehensive Nutrient Management Plans (CNMPs) are conservation plans applying
specifically to animal feeding operations (AFOs) laying out how an owner/operator will manage manure from production to application or disposal. 6 If an AFO discharges manure or wastewater into a natural or man-made ditch, stream, or other waterway, it is defined as a Concentrated Animal Feeding Operation (CAFO), regardless of its size. This is an important point as
all CAFOs are defined as point source dischargers under the 2003 revisions to the Clean Water Act. As point sources, they are regulated under the state EPA and each owner/operator is required to hold a National Pollutant Discharge Elimination System (NPDES) permit under the state program. As of December 31, 2006 all CAFOs applying for and covered by a NPDES permit are required to develop and implement an up-to-date CNMP describing the practices and procedures that will be implemented to meet all of the production and land application
requirements that apply to a specific operation. 63 CNMPs are updated every 5 years.
Components of CNMP Issues addressed
Manure handling/storage plan 1. Diversion of clean water
2. Prevention of leakage storage plan 3. Adequate storage
4. Manure treatment 5. Management of mortality
Land application plan 1. Proper nutrient application rates to achieve a crop nutrient balance 2. Selection of timing and application methods to limit risk of runoff Site management plan Soil conservation practices that minimize movement of soil and manure
components to surface and groundwater
Record keeping Manure production, utilization, and export to off-farm users
Other utilization options Alternative safe manure utilization strategies such as sale of manure, treatment technologies, or energy generation
Feed management plan Alternative feed programs to minimize the nutrients in manure
Figure 4.1: Comprehensive Nutrient Management Planning (EPA)
55 Table from http://www.epa.gov/agriculture/ag101/impactcnmp.html
42
While broad adoption of nutrient management planning can help reduce agricultural nutrient runoff in a watershed, the upfront costs nutrient management planning places on farmers understandably presents a disincentive to voluntary development of such plans. Therefore, financial incentive structures must be clearly in farmers’ economic best interest in order to secure participation. Leveraging county, state, or regional regulatory authority alongside a financial incentive is often an approach to ensuring timely and large scale enrollment in financial incentive programs, resulting in maximum participation at a minimum cost to farmers.
Case Box 2: MANDATORY COUNTY NUTRIENT MANAGEMENT IN PRACTICE Wisconsin Programs
With the passage of a state law in 2005 and enforcement starting in 2008, Wisconsin requires all cropland to have a nutrient management program, though farmers can only be compelled to comply if their county government provides a cost share program under Wisconsin
Department of Agriculture Trade and Consumer Protection (DATCP). These cost share programs are designed to cover at least 70% of a farmer’s annual nutrient management costs (90% if there is economic hardship) or alternatively offer up to $7/ac for 4 years, after which the state may require the farmer to continue practices at his or her own expense.1
Nutrient management may also be required outside of cost share counties if a farm is:
1. Causing a significant discharge
2. Regulated by local manure storage/livestock siting ordinance or DNR WPDES permit 3. Accepting nutrient management planning or manure storage cost share funds
4. Participating in the Farmland Preservation Program.
Wisconsin county governments apply annually to DATCP to access nutrient management planning cost-share dollars. When the program began in 2006, it was funded at half a million dollars; vocal lobbying by the environmental coalition during 2008-2009 state budget debates increased the program funding to $5 million.1 Following this dramatic increase in funding, the national economic crash and subsequent state budget constraints have limited actual payouts to approximately $2 million/year as the other $3 million get annually reallocated to more
immediate agency needs.
According to the 2014 annual report issued by DATC, 6,053 nutrient management plans were filed in 2014 across 2,583,737 acres, meaning 28% of Wisconsin’s croplands are currently covered by nutrient management plans.1 Considering that only 800,000 acres were covered in 2006, the cost-share program is clearly increasing agricultural acreages covered by nutrient management plans.1 Over 80% of the nutrient management plans written in 2014 used Snap Plus, a software designed for use by farmers in preparing their plans in accordance with Wisconsin’s 590 Nutrient Management Standard [see Chapter 5], suggesting the tool provides useful assistance to farmers in the development of nutrient management plans.1
As noted above, Wisconsin’s Farmland Preservation Program (FPP) has also proven a major entry point for farmers’ nutrient management planning. This program, founded in 1977 and housed under the WI Working Lands Initiative since 2010, pays farmers who keep lands in agricultural use an annual income tax credit ranging from $5-10/acre for all of their land, including both farmed and unfarmed acres.1 As of 2009, FPP began requiring that enrollees
43
also maintain compliance with soil and water conservation requirements, including nutrient management planning. FPP provides tax relief to nearly half of Wisconsin’s total farmlands, specifically to acres located in state-designated “agricultural enterprise areas” or zoned for farmland preservation.
Looking at these programs side by side, there is some administrative confusion that must be
Looking at these programs side by side, there is some administrative confusion that must be